Alliance tax plan would rebuild a civilized New Zealand

Alliance Party media release FOR IMMEDIATE RELEASE Wednesday 23 November 2011

The Alliance Party is calling for a major overhaul of New Zealand’s taxation system to assist low to middle income earners, and to pay for free access to high quality public goods including health and education.

Alliance spokesperson and Dunedin North candidate Victor Billot says one of the key goals of the Alliance is to restore a fair tax system based on ability to pay, and to raise funds to rebuild a civilized society.

“A society where some are unable to afford healthy food, warm housing or medical care is not a civilized society."

Mr Billot says the budget would see a new deal for pensioners and beneficiaries

“The first $10,000 of income would be exempt from tax. This applies to everyone, but it would most benefit those on low incomes. Adjustments will be made so that those on Government superannuation and benefits are included.”

The Alliance tax plan would provide a massive boost for low income New Zealanders struggling to make ends meet, says Mr Billot.

The Alliance would introduce a progressive tax scale to pay for its ambitious social programme to end poverty and create a high living standard for all New Zealanders.

With income, the first $10,000 would be tax free, income from $10,000-$48,000 taxed at 17.5%, income from $48,000-$70,000 taxed at 30%, income from $70,000-$100,000 taxed at 40%, income from $100,000-$200,000 taxed at 50%, and income earned above $200,000 upwards taxed at 60%.

Mr Billot says the removal of GST was also essential to create a fairer tax system.

"The Alliance would gradually replace GST, starting with essentials such as food, and put in its place a financial transactions tax (FTT) at the low rate of 2 cents per $100. The FTT would be charged on withdrawals only, not deposits."

He says GST is a regressive tax that hits the poor at the same rate as the rich and burdens business with unnecessary compliance costs.

The Alliance would increase spending on health to 7.55% of GDP immediately, to rise to 8% by the third year and urges that this 8% of GDP be adopted by all parties to provide consistent funding for health.

"The extra income from our tax plan would fund free tertiary education, universal student allowances, abolition of school fees, 22,000 state houses over three years, and a universal child benefit."

"It would pay for free doctor visits, no prescription charges, reduced waiting lists, and meeting urgent needs in mental health, aged care, and disabilities. It would provide free hearing and eye tests and free dental check-ups."

Key points for Alliance tax plan for New Zealand

• First $10 000 income tax free
• Immediate removal of GST on food and phase out of GST over time
• Less tax for low to middle income earners on progressive tax scale
• Introduction of Financial Transactions Tax
• Introduction of Capital Gains Tax (family home exempt)
• Introduction of inheritance tax and reintroduction of land tax
• Taxes would fund free education, universal student allowances, a major boost to public health spending including free doctor visits and no prescription charges, universal child benefit, abolition of school fees, and investment in housing and infrastructure.

The six criteria the Alliance evaluates its budget and tax plan on:

Equality: Progressive tax, lifting benefits, greater equality of educational credentials in general (and for women and Maori in particular) will reduce inequality of disposable income.

Employment: Many programmes (state houses, extra health and education spending, better transport) will create jobs.

Growth: Education and health are the best long-term investment in growth you can have.

Environment: The carbon tax, urban transport, monitoring water quality, and reduced inner-city congestion will all make a contribution.

Inflation: The extra revenue we raise matches our extra spending.

Balance of payments: Our mix of extra revenue–expenditure will provide extra spending power to the poor. Compared to the rich, they spend more on domestically produced goods than on imported goods.

ENDS

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